Civil vs building work: which is the biggest driver for contractors?

This summer, the government launched a massive transport investment plan valued as ‘multi-billion’ only six months after releasing details of a £500 billion infrastructure investment pipeline, but is this boosting contractors order books? The award of a swathe of packages on High Speed 2 (HS2) this summer has had an impact at Balfour Beatty, which is ranked second in Glenigan’s ranking of the 100 contractors, and 62% of the group’s orders are civil engineering. VINCI and Skanska are also working on HS2 and 63% and 76% of their order books respectively are civil projects, but the only other civil orientated contractor in the top 20 is Costain. Glenigan’s research, which covers the 12 months to the end of October 2017, shows that only 12 of the top 100 contractors have won more civil than building work by value over the past year. Outside the top 20, the other contractors with an order book where civil work equals or surpasses building-related projects are: VolkerWessels (64%), Amey’s parent Ferrovial (95%), Alun Griffiths (98%), Murphy (94%), Jackson’s parent One Group (50%), Black & Veatch (100%), Keltbray (95%) and Barhale (97%) The government’s civil spending plans are also only having a limited impact in regional terms. Only in the West Midlands, which is been the focus so far of HS2 spending, is civil work the dominant influence on contract awards. At £1,270 million, Balfour Beatty has the highest civil order book but sits behind VINCI in the overall West Midlands top 10. The French contractor has a total order book of £1,400 with £1,235 million derived from civil engineering. All the contractors in the West Midlands have won more civil than building orders with the exception of Laing O’Rourke, which is working on the £400 million-worth of projects for Tata at its Jaguar production plant. Across in the East Midlands, only four out of the top 10 contractors have won any civil work at all in the last year and this ratio is repeated in the East of England. Seven out of the top 10 in the North East and North West have won civil work in the last 12 months but the latter is seeing more spending. The £1 billion expansion of Manchester Airport puts Laing O’Rourke in top spot, while Farrans, VolkerWessels and Buckingham all have civil order books or £100 million or more. Across the Pennines, civil spending is having less impact as the new YORCivil2 framework is only just kicking in. With CrossRail work now all let, London is also seeing a dearth of major civils projects. Major infrastructure projects such as the Aberdeen Western Peripheral Route previously had a disproportionate impact in Scotland. While eight out of the Scottish top 10 have won civil work in the last year, building orders dwarfs all of this workload. In Wales, Northern Ireland, the South West and the South East, there are only two companies in each top 10 where civil orders are larger than building awards, showing that for all the government hype infrastructure spending has yet to have a transformative impact on order books.